- In the last four years (2019-2022), the Nigerian government allocated a total of N43.6 billion to the Nigeria Postal Service (NIPOST), but NIPOST’s revenue during the same period was only N16.7 billion, indicating significant financial inefficiency.
- Despite a four-year reform program initiated in 2017, which aimed to make NIPOST self-reliant, the company blamed the consistent lack of budget for capital expenditure for the failure of its plans.
- To address its declining revenue, NIPOST plans to embark on a revenue generation initiative by implementing digital postcodes and an Address Verification System (AVS).
The latest data released by the National Bureau of Statistics (NBS) has again revealed the inefficient status of the Nigeria Postal Service, which continues to record dwindling revenue year on year amid billions in annual allocations from the government.
Checks by Nairametrics show that the federal government had allocated a total of N43.6 billion to the postal service in the last four years (2019-2022).
Within the same period, the company’s revenue totalled N16.7 billion, a dismally low earning compared with what has been spent on it.
While the NBS data revealed that NIPOST recorded N3.1 billion in revenue in 2022, budgetary allocation to the company for the year was N13.2 million.
The 2022 revenue shows a 17% decline compared with N3.63 billion it recorded in 2021.
Breakdown of allocations and revenue
In 2022, the federal government allocated N13.2 billion to NIPOST, all for recurrent spending. This followed a similar pattern of budgeting for the parastatal over the last seven years, where it had no budget for capital expenditure.
Similarly, in 2021, N12.5 billion was budgeted for NIPOST, all for payment of salaries, wages, and pension contributions.
The situation was the same in 2020 when the company got N9.09 billion as the total allocation. Also in 2019, N8.8 was budgeted for the company, and everything went into recurrent expenditure, which was mainly payment of salaries.
NIPOST 2022 budget
NIPOST recorded 2019 a revenue of N5.37 billion in 2019 and by 2020, its earnings declined to N4.71 billion. The downtrend in revenue continued in 2021 as it posted N3.63 billion as income before a further decline to N3.1 billion in 2022.
Failed reform
NIPOST, which currently acts as an operator and regulator in the logistics industry had in July 2017, commenced the implementation of a four-year reform program.
The reform titled: “NIPOST VISION 2020-Embracing the Future Today”, included overhauling the entire management of the organization, diversifying the range of services, turning the component units into business entities, and rightsizing the workforce.
The whole idea was to make the agency self-reliant and self-sustaining at the end of the four-year window. However, the company blamed the consistent lack of budget for capital expenditure for the failure of its plans.
New revenue drive
To stem the tide of its consistent revenue decline, the Postmaster General of the Federation/CEO of NIPOST, Sunday Adepoju, in August announced that NIPOST would soon embark on massive revenue generation for the government and improve security in line with the renewed hope agenda of the current government to boost the Nigerian economy through the implementation of digital postcodes and Address Verification System (AVS).
According to the Postmaster General, the implementation of the Postcode and AVS by October this year will help NIPOST contribute to the country’s revenue and end the challenges associated with Know Your Customer (KYC).
- “NIPOST is embracing digital transformation to elevate operational efficiency in a world where digital solutions and data utilization have taken centre stage, an increasing number of postal operators. The National Digital Alphanumeric Postcode System is an initiative that has the potential to significantly improve nationwide service delivery, enhance security, and generate revenue for NIPOST and other government agencies.
- “Our teams worked hand in hand with esteemed partners, including the National Population Commission (NPC), The National Space Research and Development Agency, (NASRDA), Office of The Surveyor-General of the Federation (OSGOF), NETPOST, Avaris Worldwide and other government agencies,” he said.
Ideas for a new NIPOST
Apparently dissatisfied with the current state of NIPOST and its laxity in playing expected roles in the digital economy space, the Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani, recently through a challenge to Nigerians to suggest how the company can be repositioned. Tijani in a post on X, https://twitter.com/bosuntijani/status/1699129850135466332?t=i2si9q2jwP6xsgZZIRplVw&s=19 said NIPOST with over 1,180 post office outlets and 3000 agencies should be playing critical roles in the country’s digital economy.
The post has elicited responses from many Nigerians and most prominently tech founders and members of the tech community. One of the respondents was the CEO of Future Africa, Iyinoluwa Aboyeji. According to him:
- “The ideal NIPOST would be like the NIBSS of logistics. Let it be the open backbone infrastructure for licensed courier companies to power logistics for commerce and trade across the country.”
The idea was supported by the founder and CEO of the Hotel.ng, Mark Essien, who added NIPOST in this regard would also power fintechs and help in the delivery of bank cards to homes.
Also responding to the Minister’s post, Hussain Shehu (@hussaini_mshehu) said:
- “NIPOST is in the best position to be the steward of a verifiable Addresses Database. One challenge of last-mile services is the lack of a unique ID such as a Postal ID for easy delivery and/collection of goods. If every house and business can have a unique Postal code instead of the district one we have today it will be great for other businesses to plug into.”
Godfrey Egedegbe (@Godfrey_PPP), the first reform NIPOST needs would be to change the attitude of its staff via training.
- “NIPOST has the ability to be #1 in the Nigeria market. But the staffs need serious training and retraining. The attitude from some of the staff is very appalling. They resume very late and close very early. And some days they don’t show up at all. They treat customers with so much disrespect. My experiences with NIPOST have never been a pleasant one.”
Suggesting how NIPOST could drive e-commerce in Nigeria, Abidakun Anthony (@anthonyabidakun) said:
- “E-commerce Integration is paramount. NIPOST should actively support and integrate with e-commerce platforms to enhance online shopping experiences. This involves efficient last-mile delivery, returns management, and secure payment gateways.
- “E-commerce integration for NIPOST is about aligning postal services with the needs of the booming online retail industry. It requires efficient logistics, secure payment solutions, and streamlined customs processes to support both businesses and consumers in the digital age. This integration can be a win-win, boosting e-commerce while revitalizing and modernizing postal services in Nigeria.”
Meanwhile, NIPOST in its current state continues to face stiff competition from other well-managed privately owned logistics companies in the country.
The services rendered by NIPOST though not limited to these include private mail bag renewal, parcel clearance/delivery, billboard/advertisement, courier companies licensing, special delivery/ small packages, P.O. Box renewal, sales of stamp/taxed items, philately sales, sales of postal literature, and international reply coupons.
Good news report and suggestions that is worth trying out. But i need to ask is NIPOST supposed to make profit? I am sure the American version the USPS is making Profit from its handling of postal services in the US. Just wondering .
Yes, NIPOST is supposed to make profit but there are aspects of its operations that is considered a universal obligation. They have to render certain services whether profitable or not. In Nigeria, most courier companies operate only in cities because rural areas are not profitable. Only NIPOST maintain its presence there for rural inclusion. Therefore govt should fund NIPOST even at a loss and to use NIPOST for financial, social and digital inclusion of rural areas. Govt should adopt strategic loss for NIPOST and make it efficient so that millions of Nigerians who depend on logistics can have a cheaper means of running their businesses. After all, they are subsidizing other sectors.
As for US Postal service, those who developed the technology we are bragging about today still write and send letters but a Nigerian who has not developed anything technology will tell you who writes letters these days when we have email and other instant messaging technologies. With the attitude of Americans who value their own and with the support USPS got from govt, USPS is one of the highest employers of labour in America with over two hundred thousand employees.
This is a very good read. I believe and do hope Nipost became very relevant. The digital postcode is a welcomed development